DAIRY FACTORY’S APPEAL

Sun (Auckland), Volume IV, Issue 933, 28 March 1930, Page 11

DAIRY FACTORY’S APPEAL

ACTION OF INTEREST TO PASTORALISTS CASE AGAINST FARMER Press Association WELLINGTON, Today. A case of considerable interest to the pastoral community came before the Court of Appeal, consisting of the Chief Justice, Sir Michael Myers, Mr. Justice Herdman, Mr. Justice Blair, Mr. Justice Smith and Mr. Justice Kennedy, today, in tho appeal of the Eitham Co-operative Dairy FactoryCompany against William Johnston, a Ngaere farmer. The appellant company was incorporated in 1892 with a clause in its articles providing that, subject to the dividends from time to time declared, the whole of the net profits of the company were to be paid to the suppliers, provided that each supplier held one share for every 300 gallons of milk or 1081 b of butter fat supplied during one year. The respondent became a shareholder in 1911, acquiring 7G shares. In 1912 the appellant company altered its articles, providing that suppliers should take one share for every 150 gallons of milk or 561 b of butter-fat supplied. In 1917 the articles were again altered, including the following: “By article 2 a bona fide member shall mean a member who holds the number of shares required by article 8 hereof within the time required, and who supplies :he company with all the milk he receives from the particular herd of cows which lie has for the purpose of supplying milk, save for such reasonable quantity as he may require for his own use during the milking season. Article 55 was altered to provide that all milk or butter-fat supplied by a non bona fide member should be deemed to be purchased by the company at the price paid by the company to members, and such non bona fide members should not be entitled to 'any further payments which the company might make to bona fide members. Tho plaintiff supplied the whole of his milk to the company to the end of the 1923-24 season. In the following season, he supplied the whole of his milk to the company till November 4. From then till February, 1925, he supplied only half the milk to the company. During this period he was informed by officials of the company that unless he supplied the whole of his milk he would not be entitled, under the articles, to share in the bonuses. From February 28, 1925, respondent ceased to supply milk to the company. Respondent, in accordance with the articles, was treated as a non-bona fide member, and was not paid the bonuses allowed to other suppliers. He brought the action against the company last year, claiming £lOl lCs 7d due to him from the company as bonuses with respect to butter and butter-fat supplied between September 1924, and February, 1925. Mr. Justice Ostler held that article 55, regarded as an act of legislative authority by tho company over its shareholders, was ultra vires of the company, and further that the company had failed to prove a contract with the respondent in terms of article 55. He therefore gave judgment for the respondent for the sum claimed, with costs. An appeal is now brought from this decision. Mr. A. H. Johnstone, Auckland, and Mr. J. .L. Weir, Eitham, are appearing for the company, and Mr. A.. Chrystal, Eitham, and Mr. A. J. Mazengarb, Wellington, for the respondent.